Chipotle Mexican Grill Inc. (CMG) investors have a very good day.
The stock rallied 22% on Thursday, April 26, following a first-quarter release of revenue released under brand-new CEO Brian Niccol.
The fast-paced casual chain slashed on all fronts on Wednesday, surpassing Wall Street forecasts for revenue, revenue, and comparable restaurant sales. The restaurant will open at least 130 new locations this year. In the intention to profit Niccol underlined his intention to rejuvenate the brand after two years with stagnant growth.
"I think the brand was invisible, and I think if the brand becomes visible and we're leading culture, it'll be a huge opportunity," he said. "This brand needs to be a leading culture, not responsive, and the people who are loyal to that brand, that's what they want to be part of."
Niccol's action plan envisages taking delivery and boarding through digital ordering, menu innovations, and improving restaurant design. Digital revenue grew 20% year-on-year in the first quarter, accounting for 8.8% of revenue. He also told analysts that while a new food platform such as breakfast or a late-night menu is not yet in the works, the company has begun to add over 1
"In the coming months, we will be conducting various tests on key innovation topics such as customer access, digital experience, menu and restaurant experience, and realigning the organization to support the forward strategy," he said.
In the first quarter, Chipotle reported earnings of $ 2.13 per share, compared to the expected $ 1.57, according to Factset. It reported net sales of $ 1.15 billion, about $ 2 million more than analysts forecast. Finally, comparable restaurant sales increased 2.2%, higher than the expected 1.3%.
These numbers should be a relief for Niccol, the one from Yum! Brands (YUM) Taco Bell in February. While largely welcomed by investors and confirmed by the industry, some critics were skeptical of its franchising background, its operational know-how and the different attitude between Chipotle and Taco Bell.
"We have received many questions regarding the types of possible operational changes that could make Brian a CMG," JP Morgan analyst John Ivankoe wrote in a Monday memo, pointing to the sea of change He could initiate a review, menu deals and a transit.
The results Tuesday, nevertheless, proved that, no matter what happens under Niccol, Chipotle's balance sheet will not be neglected.
"We are in the process of achieving greater performance in sales, transactions, margins and new restaurants," he said in a statement. "This path to performance is based on a strategy to deliver the fundamentals while introducing consumer-driven innovation across the enterprise, as well as a structure and organization of creativity, action and accountability."
First Quarter Chipotle's revenue was $ 1.15 billion. This corresponds to an increase of 7.4 percent compared to the same period of the previous year. Growth was driven by the inclusion of 35 new restaurants this quarter. The increase in comparable restaurant sales is due to higher menu prices company said.